Flag state performance: An empirical analysis

Based on data available in mid-2006, the five cooperating international institutions of shipping — BIMCO, Intertanko, Intercargo, ICS, and ISF — produced a summary of factual information on 106 flag states. These international institutions intentionally avoided drawing conclusions on underperformance. This paper extends this assessment allowing for an in-depth empirical assessment of flags performance. Towards this end, the analysis uses weight factors reflecting the importance that an operator might wish to attach on the different variables before making his flag choice, and seeks to statistically (un)group ‘conventionally’ grouped flag states performance. The paper also examines whether IMO membership and/or active participation in the IMO is associated with a greater compliance of a flag-state to safety and relevant environment rules and thus to a better performance. The findings challenge the classic outright categorization of national flags as good performing ones and of commercial flags as those performing badly. The findings also support the suggestion that an active IMO participation, rather than a simple membership, enhances flag performance.